Yahoo! Takes Another Giant Plunge

Yahoo!Yesterday’s WSJ (subscription required) reported that Yahoo’s CEO, Terry Semel, hinted of a slowdown in search ad revenue growth. Significant news – search ad revenue growth has always been on the incline. His statement preceded a 12% drop in the stock price for YHOO (rival GOOG took a hit as well, dipping the price blow the $400 mark). Another big setback for the industry’s #2 player. Last month Yahoo! delayed it’s release a long awaited software upgrade that has caused it’s stock to take it’s biggest plunge in history – 22%.Analysts have been wondering if the search industry is a bubble waiting to pop.

Danny Sullivan, considered the search industry’s top expert, doesn’t think so.
Regarding the state of the search economy, Sullivan so eloquently, puts it:

“In fact, as I told a reporter yesterday, I think search will be just fine given its history. Search was booming during the ad downturn of 1999-2001. It was booming because of its highly measurable, highly converting nature. Born from a downturn, I expect it will continue to ride out any future ones, if not benefit from them.”

Living in Boxes: China’s Trade Deficit = Affordable Housing Solutions

The rapidly rising U.S. trade deficit with China has caused some US entrepreneurial homebuilders to “think outside the box”. Or rather – think “using the box”.

The Facts

China exported $243 billion worth of goods to the US last year (2005). The US exported only $41.5 billion worth of goods to China, leaving a trade deficit of a staggering -$201.5 billion. (Source: US Census Bureau – Trade in Goods with China)

As a direct result of this disproportionate balance, tens-of-millions of empty cargo containers are amassing on US soil. It’s simply cheaper to stockpile these containers than return them empty to the Far East. The problem has become so rampant, that many residential communities have forced local legislators to relocate this logistical waste to designated container junkyards. But as the trade deficit widens, the problem only increases. Major port communities, particularly in the LA and Long Beach, CA area have also been victims of this “plague”.

Entrepreneurs to the Rescue

Savvy entrepreneurs have discovered a solution to contain this container dilemma.

By recycling the containers into building materials, homebuilders can buy materials to supply affordable housing at a cost of approximately $10 per container. According to home improvement guru Bob Vila, “architects, designers, planners, and homeowners are finding renewed interest in these inter-modal steel building units (ISBUs) as they look for affordable, sustainable housing options for the 21st century.”

Empty containers are useful for both single structures, or as building blocks for larger structures. The units come in 40’ x 8’ x 8’ and 20’ x 8’ x 8’. There are pretty slick ISBU designs, and even architectural competitions.

For more information on building with ISBU’s see fabprefab.com.

Can Nissan & Renault Save the Troubled GM?

Renault saved Nissan in 1999. The partnership now boasts the highest profit margins in the industry. GM took a $10.6 billion plunge last year. Can the powerhouse French / Japanese duo rescue the US’s largest auto maker?

The offer by the French / Japanese group to buy a 20% stake in GM would arm the troubled automaker with a potential $3.3 billion dollar in cash.

Although the car industry has undergone much consolidation in the past decade, most of it has been disastrous. Jaguar and Saab, were consumed by Ford and GM respectively only to cost many billions in further losses. The Daimler-Benz Chrysler merger took approximately 5 years to stabilize.

If the Renault Nissan group purchases a stake in GM, it’s estimated that the conglomerate would hold a 21.9% global market share, ahead of Toyota with a 12.3% global market share (source Automotive news). An extremely aggressive move, to say the least.

The two car manufacturers are due to meet this week in Detroit for further talks. Many Wall Street analysts, including Standard & Poors, are skeptic that the deal will go through.

The key questions remain: Can GM reclaim it’s title of “king” of the automobile industry without the help of foreign investments? Or are we in an era that requires cross-continent M & A’s to retain profitability in this highly competitive auto industry?

If Housing Prices Stopped Rising

According to the latest stats, American home prices are still on the rise – in most major markets across the nation.

The National Association of Realtors published a median increase of 4.2% from 1/06 to 4/06. Compare this figure to the published 16.6% last year.

Although prices appear to be leveling off, many economists don’t predict a sour turn for the worst. If housing prices were to weaken, logically the fed would cut rates. This is clearly not happening with rates at a 4 year high (currently 6.7%). A clear indicator that the housing market is still strong. And it would take a serious and unexpected shock to our economy to change that. Year on year, aggregate average US home prices have not fallen since the Great Depression.

So what does this “slower” growth mean to the economy as a whole? And why should I care about housing prices, if I currently am not a homeowner?

The housing market is a powerful motor which drives an economy. Homeowners “feel” richer, and that drives consumer spending. If housing prices stopped rising at these sharp rates, and only increased moderately from year to year (or remain stagnant), this has the potential to create a serious dent in the economy as a whole.

Even the non-homeowners like myself will surely be affected. And I’m a little bit worried.

My first blog entry, and my 2 cents.